"There were significant and substantial weaknesses in the budgeting staff, in training of the budget staff, in their accounting procedures, and their ability to do budgeting forecasting," said H.D. Palmer, the spokesman for the Department of Financing.

The audit found major differences between what the CPUC was reporting to the Department of Finance, and what the agency is reporting to the State Controller's Office.

"We looked at all of the 14 funds the PUC administers -- and seven of them had differences of more than a million dollars," Palmer said.

The differences totaled more than $400 million.

The CPUC gets money for these funds from residents by fees and taxes on phone bills.

During a budget subcommittee on Wednesday, lawmakers criticized the CPUC for the accounting problems.

The CPUC did not return calls from KCRA 3 on Wednesday, but in the audit, the agency agreed with most of the accounting problems discovered.

They agency will have until April 24 to submit a plan to correct the problems.